Lease Calculator

How Lease Payments are Calculated

Leasing is an alternative to buying a car or heavy equipment. Instead of paying off the total purchase price, you pay for the depreciation of the asset during your term of use, plus a financing fee. This calculator estimates your lease payment details and totals.

The Key Components of a Lease

• Adjusted Capitalized Cost: The net value of the vehicle or equipment being leased. It is calculated by taking the sales price and subtracting the down payment and trade-in value.
• Residual Value: The estimated value of the asset at the end of the lease term. This is determined by the lessor and is usually expressed as a percentage of the original MSRP.
• Money Factor: The financing fee charged by the lessor, equivalent to the interest rate on a loan. You can convert a Money Factor to an equivalent annual interest rate by multiplying it by 2,400.

Lease Calculation Formulas

Your base monthly lease payment consists of two parts:

• $$\text{Monthly Depreciation} = \frac{\text{Adjusted Capitalized Cost} - \text{Residual Value}}{\text{Lease Term (Months)}}$$
• $$\text{Monthly Finance Fee} = (\text{Adjusted Capitalized Cost} + \text{Residual Value}) \times \text{Money Factor}$$
• $$\text{Base Monthly Payment} = \text{Monthly Depreciation} + \text{Monthly Finance Fee}$$
• $$\text{Total Monthly Payment} = \text{Base Monthly Payment} \times (1 + \text{Sales Tax Rate})$$